If you are one of the many people in Indiana who cringes every time you look at your bank balance or go to the mailbox and see a pile of bills waiting for you, you may well be wondering how you can get out from under a seemingly endless supply of debt. In evaluating your options for this and for creating a brighter financial future for yourself, it is important that you understand the differences in the two primary forms of debt – secured and unsecured.
As explained by NerdWallet, with unsecured debt there is no risk that you will lose a precious asset because the debt is not associated with any particular item. In a Chapter 7 bankruptcy, these type of debts are generally discharged and no further action is needed. Examples of unsecured debt include most credit cards, medical bills and even student loans.
A secured debt is linked to a particular asset and a result, the related asset may be taken by a creditor if you are unable to repay the debt. Examples of secured debt include car loans and home loans. People rebounding from bankruptcy may also start to rebuild their credit with a secured credit card. This may be a good stepping stone to a new unsecured credit card.
If you would like to learn more about the different types of credit available to you and the pros and cons of each one for you, please feel free to visit the secured and unsecured credit page of our Indiana debt relief and bankruptcy website.